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Saturday, November 23, 2013

Harris v. Carter case brief

Harris v. Carter case brief summary
582 A.2d 222 (1990)

CASE SYNOPSIS

Plaintiff, minority shareholder, sued
defendants, old shareholders, new owners, and directors, alleging
that the new owners looted the corporation and that the selling
shareholders were negligent and that their negligence breached a duty
they owed the corporation. Defendants moved to dismiss the amended
and supplemental complaint.

CASE FACTSPlaintiff, minority shareholder, sued
defendants, old shareholders/directors, new owners/directors,
alleging that the old shareholders/director were negligent and that
their negligence breached a duty to the corporation. The minority
shareholder also asserted that the new owners/directors looted the
corporation. The defendants moved to dismiss the amended and
supplemental complaint, asserting that the action was not properly
instituted as a derivative action because the shareholder suit was
filed after the change of control occurred; that the amended
complaint did not state a claim upon which relief could be granted;
and, that with respect to certain defendants the court lacked
personal jurisdiction.

DISCUSSION

The court held that pre-suit demand on the
directors was excused, and the consent statute authorized service of
process on the old shareholders/directors.

Further, the complaint
stated a claim for breach of duty of care owed by the old
shareholders/directors.

Accordingly, the motions were denied.

CONCLUSIONThe motions to dismiss were denied. The
court concluded that plaintiff's, shareholder, amended complaint
stated a claim upon which relief could be granted against those
defendants who negligently sold control of the corporation. Further,
all the defendants were properly served with process; thus, the
motion to dismiss for want of personal jurisdiction was denied.

Recommended Supplements for Corporations and Business Associations Law

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